Notes/Observations
- Re-emergence of Covid-19 in Spain, along with surging cases across Australia and Southeast
Asia
- Focus on safe-haven flows as spot gold hits record and approaches the $2,000/oz mark
- German IFO Survey shows improvement from month-ago levels
Asia:
- RBA Assist Gov Kent: New policy measures are not under consideration
- BOJ Summary of Opinions for July 14-15th policy meeting: Need to watch policy impacts for time being
Coronavirus:
- Total global cases 16,201,176 (+4.9% vs. Fri); Total deaths: 647.9K (+2.5% vs. Fri)
- Australia State ofVictoria reported 532 coronavirus cases (record high) v 357 prior; 6 additional coronavirus deaths
- China reported 61 infections – the most number of domestic coronavirus infections in more than four with outbreaks in its western and northeastern regions
- Hong Kong confirmed plan to ban all dine-in restaurant service, and to require all residents to wear a mask at all times while outside beginning Wed (July 29th)
- Tokyo reported 239 new coronavirus case on Sunday
- Spain reported over 900 new daily infections for the last two days
- Britain advising people not to travel to Spain; removed the country from the list of safe places to visit following a surge of COVID-19 cases.
Europe:
- Italy Econ Min Gualtieri said to warn of autumn funding crisis as EU summit claims unravel. Urged leaders of Italy’s ruling collation to make a formal request to unlock €36B of immediate virus loans via ESM
- ECB’s Weidmann (Germany): Joint debt to finance coronavirus aid for weaker member states should remain an exemption
- UK Chancellor of the Exchequer Sunak (Fin Min): Reported to be considering an online sales tax
- Fitch affirmed Greece sovereign rating at BB; outlook stable
- Fitch affirmed European Stability Mechanism at AAA; outlook Stable
- S&P affirmed Turkey sovereign rating at B+; outlook stable
Americas:
- White House Chief Of Staff: Reached agreement in principle with Republicans on relief Bill; likely to be unveiled on Monday
- Senate Republicans set to unveil a $1.0T. coronavirus relief bill on including payments of $1200, tax credits for small businesses and restaurants, and extend a federal moratorium of evictions. Trump administration supported extending unemployment benefits until the end of the year, but at a reduced rate.
- US Currency report may target China and Hong Kong
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.15% at 366.76, FTSE -0.24% at 6,109.06, DAX +0.11% at 12,850.80, CAC-40 -0.25% at 4,943.87, IBEX-35 -1.53% at 7,183.00, FTSE MIB -0.07% at 20,061.50, SMI +0.47% at 10,262.26, S&P 500 Futures +0.39%]
- Market Focal Points/Key Themes: European indices open modestly lower across the board (except the DAX), trading mixed as the session progressed; focus on resurgence in coronavirus cases across the world; materials and utilities leading sectors to the upside; consumer discretionary and telecom among underperformers; software firms supported following SAP results; AstraZeneca and Daiichi Sankyo enter $1B oncology collaboration agreement; UK government announces quarantine for Spanish travellers; earnings expected in the upcoming US session include Hasbro, NXP Semiconductors and Avery Dennison
Equities
- Consumer discretionary: Ryanair [RYA.UK] -7% (earnings), EasyJet [EZJ.UK] -11%, IAG [IAG.UK] -9% (UK government advised its people not to travel to Spain)
- Healthcare: Indivior [INDV.UK] +33% (agreement with DOJ)
- Technology: SAP [SAP.DE] +3% (earnings; raises FCF outlook), Wirecard [WDI.DE] +21% (receives interest for core business)
- Telecom: Royal KPN [KPN.NL] -3% (earnings)
Speakers
- ECB’s Panetta (Italy): Too soon to give the all clear signals if region is out of danger. Economic activity was still well below pre-crisis level but data was making progress but not enough for satisfaction. Needed to provide a strong sense of monetary stimulus to consolidate the recovery and bring inflation back up. If recession were to persist banking sector would have to cope with sharp deterioration in credit and resurgence in non-performing loans (NPLs). Reiterated stance that likely to use full Pandemic bond buying scheme unless there is a significant upside surprise in data. Believed that by 2020 the cumulative effects of measures at add 0.8% to inflation and 1.3% to GDP
- Czech Central Bank’s Holub (chief economist) saws rates staying at current level until mid-2021
- German IFO Economists noted that the domestic economy was recovering step-by-step
- China Foreign Ministry spokesperson reiterated stance that US allegations of Houston spying were groundless
Currencies/Fixed Income
- Gold surged to a record level as safe-haven demand for the precious metal as lingering US-China tensions and rising Covid-19 cases drive flows. Focus on safe-haven flows as spot gold approached the $2,000/oz mark
- Focus on FOMC mid-rate decision and press conference.
- USD continued its soft footing as markets sensed growing concerns that the US recovery could stall and a lack of agreement among U.S. politicians on a next round of fiscal stimulus measures
- EUR/USD hovering around the 1.17 level. German July IFO Survey showed improvement from month-ago levels and suggested that Germany economy was taking baby steps towards a recovery. The break of 1.15 level last week providing bullish technical momentum for the pair to test 1.20 in coming weeks.
- USD/JPY lower by over 0.5% to test below 105.50 level as the JPY currency benefitted from safe-haven flows.
Economic Data
- (FI) Finland July Consumer Confidence: -1.6 v -3.9 prior; Business Confidence: -17 v -24 prior
- (DK) Denmark Jun Retail Sales M/M: 1.4% v 9.7% prior; Y/Y: 6.6% v 5.2% prior
- (TR) Turkey July Real Sector Confidence (Seasonally adj): 99.4 v 89.8 prior; Real Sector Confidence (unadj): 100.7 v 92.6 prior
- (TR) Turkey July Capacity Utilization: 70.7% v 66.0% prior
- (SE) Sweden Jun Household Lending Y/Y: 5.1% v 5.1% prior
- (EU) Euro Zone Jun M3 Money Supply Y/Y: % v 9.3%e
- (DE) Germany July IFO Business Climate Survey: 90.5 v 89.3e; Current Assessment Survey: # v 94.0e; Expectations Survey: # v 94.0e
- (CH) Swiss weekly Total Sight Deposits (CHF): 692.6B v 691.5B prior; Domestic Sight Deposits: 622.5B v 618.5B prior
- (HK) Hong Kong Jun Trade Balance (HKD): -33.3B v -30.2Be; Exports Y/Y: -1.3% v +3.8%e; Imports Y/Y: -7.1% v -6.0%e
Fixed Income Issuance
- None seen
Looking Ahead
- (PT) Portugal Year-to-Date Budget Report
- 05:30 (DE) Germany to sell combined €4.0B in 12-month Bubills
- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 6-month and 12-month bills
- 05:30 (BE) Belgium Debt Agency (BDA) to sell €1.5-2.0B in 2025 and 2029 OLO bonds
- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)
- 06:00 (FR) France Q2 Total Jobseekers: No est v 3.334M prior
- 06:00 (IL) Israel Jun Chain Store Sales
- 06:00 (IL) Israel to sell 2023, 2025, 2029 and 2030 Bonds (5 tranches)
- 06:00 (RO) Romania to sell RON500M in 4% 2023 Bonds
- 06:45 (US) Daily Libor Fixing
- 07:00 (MX) Mexico Jun Trade Balance: $1.6Be v -$3.5B prior
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (US) Jun Preliminary Durable Goods Orders: 7.0%e v 15.7% prior; Durables (ex-transportation): 3.5%e v 3.7% prior; Capital Goods Orders (non-defense/ex-aircraft): 2.3%e v 1.6% prior; Capital Goods Shipments (non-defense/ex-aircraft): No est v 1.5% prior
- 08:50 (FR) France Debt Agency (AFT) to sell €6.2-7.4B in 3-month, 6-month and 12-month bills (3 tranches)
- 09:00 (IN) India announces details of upcoming bond sale (held on Fridays)
- 09:45 (EU) ECB weekly QE bond buying update
- 10:30 (US) July Dallas Fed Manufacturing Activity: -4.9e v -6.1 prior
- 11:30 (US) Treasury to sell 13-week and 26-week bills
- 11:30 (US) Treasury to sell 2-Year Notes
- 13:00 (US) Treasury to sell 5-Year Notes
- 16:00 (US) Weekly Crop Progress Report
- 10:01 (UK) July Lloyds Business Barometer: No est v -30 prior
- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 90.7 prior
- 19:50 (JP) Japan Jun PPI Services Y/Y: 0.8%e v 0.8% prior
- 23:00 (CN) China to sell 10-year Upsized Special Govt Bonds
- 23:30 (HK) Hong Kong to sell 3-month and 6-month bills
- 23:35 (JP) Japan to sell 40-Year JGB Bonds
